German auto major Volkswagen will finalise by the end of this year its plans to introduce small car UP! in India that will be priced below the current entry-level hatchback Polo.
The company will consider introducing the small car with a different version for the Indian market that will be tweaked according to the conditions here.
"We are currently working on the feasibility to launch the UP! in the Indian market. I would like to take a decision by the end of this year," Volkswagen Group Chief Representative India John Chacko told PTI.
The company will modify the existing UP!, which has already been introduced in Europe, to meet the Indian consumers' expectations, he added.
Earlier in January this year, Chacko had said UP! is likely to hit the Indian roads by 2013 or early 2014.
Volkswagen Executive Vice-President Ulrich Hackenberg had said the company was looking at "a segment where Hyundai i10 and Maruti's Swift is present".
Highlighting the importance of UP! to the company's plans for India, Chacko said: "India is a very competitive and low- cost market. We are at present addressing only about 30-35% of the Indian car market. With the UP!, we will be able to launch the vast volume-driven segment."
At present VW sells hatchback Polo in both petrol and diesel variants, priced between Rs 4.67 lakh and Rs 7.36 lakh (ex-showroom, Delhi).
When asked if Volkswagen will consider setting up an engine plant in India, Chacko said: "To have an engine and gearbox unit, we need a volume of at least 2.5 lakh units annually. We are observing and working on the feasibility."
The group firm Skoda had recently said it will not launch a small car below Rs 4 lakh in India immediately as entering the segment will require the company to compromise on "safety" and "quality" of the vehicles. In 2010, it had announced to launch a small car in Rs 3-5 lakh range by early 2012.
Talking about Skoda's decision, Chacko said: "After that announcement, the market went down and now we will take a decision to bring in a small car for the entire group... It is difficult to make money in small cars."
The Volkswagen group, which is present in India through Volkswagen, Skoda and Audi, had announced to invest a minimum of Rs 2,000 crore by 2013 to ramp up capacity, launch new models and strengthen research activities.
This investment will be in addition to 580 million euros (about Rs 3,600 crore) that the European auto major had announced in 2008.
During 2011, the group had sold 1.05 lakh cars last year in India and is aiming to increase its market share to 10% by 2018 from the less than 5% at present.